Texas does not have a state income tax on wages, salaries, or most other personal income
Texas is one of nine states with no personal income tax. You will not owe state income tax on money you earn from a job, self-employment, retirement accounts, or most other sources. This applies whether you live in Texas full-time, work there part-time, or moved there recently.
The absence of state income tax does not mean Texas has no taxes at all. The state funds schools, roads, and services through sales tax, property tax, business taxes, and other revenue sources. But for most people, the lack of state income tax means a larger portion of each paycheck stays in your pocket compared to residents of states with income tax.
If you work in Texas but live in another state, or vice versa, the rules depend on where you actually live and where the income was earned. Texas does not tax income earned outside the state, and other states generally do not tax income earned in Texas if you do not live there.
Key Takeaways
- Texas has no state income tax on wages, salaries, self-employment income, or retirement distributions.
- You still owe federal income tax to the IRS, and you must file a federal return if your income meets the threshold.
- Texas funds state services through sales tax (which varies by city and county), property tax, and business taxes instead.
- If you work across state lines, your tax obligation depends on your state of residence, not where the work happens.
- Some types of income — such as certain retirement accounts or investment gains — may have special rules even in Texas.
What you still owe to the federal government
No state income tax does not mean no income tax at all. You still owe federal income tax to the IRS on all income you earn, regardless of where you live or work. The federal tax rate depends on your income level and filing status, and you must file a federal return each year if your income exceeds the IRS threshold for your situation.
For 2024, the federal filing threshold for a single person under age 65 is $13,850 in gross income. For a married couple filing jointly, it is $27,700. These thresholds change each year. If you are self-employed, the rules are different — you may owe federal self-employment tax even if your income is below the filing threshold.
Federal withholding from your paycheck works the same way in Texas as anywhere else. Your employer deducts federal tax based on the W-4 form you fill out. At the end of the year, you file a federal return to reconcile what was withheld with what you actually owe.
Sales tax and property tax in Texas
Texas makes up the revenue from no state income tax through other taxes. The state sales tax is 6.25 percent, but cities and counties can add their own local sales tax on top of that. Your total sales tax rate depends on where you shop — it can range from 6.25 percent to over 8 percent in some areas.
Property tax in Texas is set by individual counties and school districts, not by the state. The rate varies widely depending on where you own property. Texas has no state property tax, but local property taxes can be substantial. If you own a home, you will receive a property tax bill from your county each year.
Renters do not pay property tax directly, but property tax is often factored into rent. Businesses in Texas pay a franchise tax (a tax on business revenue) instead of a corporate income tax, which is another way the state generates revenue without taxing individual income.
How to file taxes if you live in Texas
You file your federal return the same way whether you live in Texas or any other state. You do not file a state return in Texas because there is no state income tax to report. You will need your W-2 forms from employers, 1099 forms if you are self-employed or have other income, and records of any deductions or credits you claim.
The IRS deadline to file is April 15 each year, unless that date falls on a weekend or holiday. You can file online through the IRS website, through tax software, or by mailing a paper return. If you cannot file by the deadline, you can request an extension, though any taxes owed are still due on April 15.
If you are self-employed or have significant income from sources other than an employer, you may need to make quarterly estimated tax payments to the IRS. These are due on April 15, June 15, September 15, and January 15 of the following year. Texas does not require separate quarterly payments because there is no state income tax.
Working across state lines: Texas and other states
If you live in Texas but work in a state with income tax, you generally owe income tax to that state on the income you earned there. Your state of residence is where you claim your primary home, not where you work. Most states tax income earned within their borders by nonresidents.
If you live in another state but work in Texas, you do not owe Texas state income tax because Texas has none. You owe income tax to your state of residence on all your income, including what you earned in Texas. Some states offer a credit for taxes paid to other states to avoid double taxation, but the rules vary.
Remote work complicates this. If you live in Texas and work remotely for a company in another state, most states will not tax that income because you earned it while living in Texas. However, some states tax based on where the employer is located, not where the work was performed. Check with your state of employment if you are unsure.
Retirement income and investment income in Texas
Texas does not tax retirement distributions from 401(k)s, IRAs, or pensions. If you receive Social Security, that income is also not taxed by Texas. However, you may still owe federal income tax on these sources depending on your total income and the type of account.
Investment income — such as capital gains, dividends, or interest — is not taxed by Texas, but it is taxed by the federal government. If you sell a stock for a profit, you owe federal capital gains tax, not Texas state tax. The federal rate depends on how long you held the investment and your income level.
Some retirement accounts have special rules. Roth IRA distributions are not taxed federally if you meet certain conditions, and they are not taxed by Texas either. Traditional IRA and 401(k) distributions are taxed as ordinary income by the federal government. Consult a tax professional if you have questions about your specific retirement accounts.
Moving to or from Texas: tax implications
If you move to Texas from a state with income tax, you will no longer owe that state's income tax on income earned after you move, provided you establish residency in Texas. Your state of residence is typically determined by where you live for the majority of the year and where you intend to make your permanent home. Some states require you to file a part-year return in the year you move.
If you move away from Texas to a state with income tax, you will owe that state's income tax on income earned after you move. You may owe a part-year Texas return for the portion of the year you lived there, though Texas will not tax that income since it has no state income tax. The state you move to will determine your residency based on when you establish a home there.
Keep records of when you moved, where you lived, and where you worked during the year you relocated. These documents help you and the IRS determine which state's tax rules apply to your income. If you own property in multiple states, consult a tax professional about your filing obligations.
Frequently Asked Questions
Do I still have to file taxes if I live in Texas?
Yes, you must file a federal return if your income meets the IRS threshold for your filing status. Texas does not have a state return to file, but the federal requirement remains the same. Self-employed people may owe federal self-employment tax even if their income is below the filing threshold.
Can Texas ever add a state income tax in the future?
Texas could theoretically add a state income tax, but doing so would require a change to the state constitution and approval by voters. This has not happened, and there is no current movement to change it. For now, Texas remains one of nine states without a personal income tax.
What if I earned income in Texas but now live somewhere else?
You do not owe Texas state income tax on that income because Texas has no state income tax. You owe income tax to your current state of residence on all your income, including what you earned in Texas. Some states offer credits for taxes paid to other states.
Are there any types of income Texas does tax?
No. Texas does not tax any form of personal income — wages, self-employment, retirement distributions, investment gains, or anything else. The state relies on sales tax, property tax, and business taxes instead. Federal income tax still applies to all these sources.
Do I need to pay quarterly taxes in Texas?
You do not owe quarterly taxes to Texas because there is no state income tax. If you are self-employed or have significant income from sources other than an employer, you may owe quarterly estimated taxes to the federal IRS. These are due four times per year regardless of where you live.